Key Takeaways
- Japanese lawmakers are pushing to lower the crypto tax rate from 55% to 20% and introduce a new regulatory framework for digital assets.
- Japan was among the first to regulate cryptocurrencies in 2017 following the Mt. Gox collapse.
- Strengthening U.S.-Japan ties under Trump could lead to closer alignment on crypto policy.
Japan’s ruling Liberal Democratic Party (LDP) has proposed reducing the country’s 55% tax rate on cryptocurrency gains to 20% as part of efforts to establish clearer regulations for the industry.
The proposal comes as Japan navigates economic challenges, including public debt and inflation. It also follows strengthening economic ties with the U.S. after the election of pro-crypto President Donald Trump.
Japan Crypto Reforms
In a draft released on March 6, 2025, LDP lawmaker Akihisa Shiozaki proposed sweeping crypto reforms that could reshape Japan’s digital asset landscape. Some speculate the changes could pave the way for the launch of Bitcoin exchange-traded funds (ETFs)
The proposal aims to position Japan as a global crypto investment hub.
As of October 2024, over 11 million crypto asset accounts had been opened in the country, underscoring its growing appetite for digital assets.
A key provision in the draft calls for reducing Japan’s capital gains tax on crypto from 55% to 20%, aligning it with U.S. rates. This would be a significant boost for Bitcoin-buying investment firm Metaplanet, now the 13th-largest corporate holder of BTC.
The reforms also seek to establish a new asset class for cryptocurrencies. The proposal argues that classifying crypto as “property” is outdated and recommends shifting its regulation from the Payment Services Act to the Financial Instruments and Exchange Act.
This would bring crypto under the scope of “financial products,” subjecting it to regulations similar to securities but with its own unique framework.
Startale Group CEO Sota Watanabe believes the tax reduction could drive mass adoption in Japan and increase on-chain activity. It may also lay the groundwork for Bitcoin ETFs in the country.
The LDP is now gathering public feedback on the proposal, with a deadline of March 31, 2025, before submitting it to Japan’s financial watchdog for review.
U.S. Alignment
Japan is known for its cautious approach to crypto regulations, which stems largely from past incidents such as the 2014 Mt. Gox hack.
It was one of the first to regulate crypto in 2017, and in 2020, it regulated crypto under property with crypto gains taxed as “miscellaneous income.” By 2022, it had passed sweeping and stringent stablecoin regulations.
Now, Trump’s economic policies, including his aggressive tariffs, may influence Japan to refine its policies to stay competitive and maintain economic stability.
Furthermore, the pro-crypto approach taken by the U.S. under Trump could influence Japan’s crypto regulations to remain competitive.
It’s no secret that Trump is a big fan of doing business with Japan. Within weeks of his presidency, Trump has secured billions in investments from the nation. This could go as high as $1 trillion across defense, energy, and other strategic industries.
Speculatively, Japan could be aiming to align its crypto policy with that of the U.S., which could see their digital asset ambitions coalesce into major Web3 investments in Japan from U.S. partners, not to mention the boost to domestic markets.
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